Federal Circuit Review | March 2016
Express Lexicography or Disavowal is not Required in Order to Deviate from a Claim Term’s Ordinary Meaning
In Trustees of Columbia Univ. v. Symantec Corp., Appeal No. 2015-1146, the Federal Circuit affirmed the district court’s construction of two claim terms and reversed its construction of a third claim term.
Columbia sued Symantec for infringement of six patents from three distinct families relating to computer security. After the district court issued its claim construction order, Columbia conceded non-infringement and appealed to the Federal Circuit.
On appeal, Columbia argued the district court erred in not giving the claim terms “byte sequence feature” and “probabilistic model of normal computer system usage” their plain and ordinary meanings. Specifically, Columbia relied on the argument that there is a heavy presumption of plain and ordinary meaning that can only be overcome when the patentee has expressly defined a term or has expressly disavowed the full scope of the claim. The Federal Circuit rejected this argument and explained that an express definition or disavowal in the specification or prosecution history is not required. Turning to the four patents that included these claim terms, the Federal Circuit found there was “overwhelming” evidence in the specifications and prosecution histories that the claims were limited and affirmed the district court’s claim construction and judgment of non-infringement.
Finally, with respect to the other two patents, the Federal Circuit reversed the claim construction of the term “anomalous,” finding that the district court had erroneously based its construction on language from the specification of two patents that was not sufficiently related. The stipulated judgment of non-infringement with respect to the two patents involving this claim term was reversed, and the case was remanded for further proceedings.
Recovery of Pre-Issuance Damages Under § 154(d) Requires Actual Notice of the Patent Application
In Rosebud LMS Inc. v. Adobe Systems Inc., Appeal No. 2015-1428, the Federal Circuit affirmed the district court’s grant of summary judgement that Adobe was not liable for pre-issuance damages under 35 U.S.C. 154(d) because it had no actual notice of the published patent application.
Rosebud sued Adobe for patent infringement two times prior to the instant action. After those cases were dismissed, Rosebud filed the instant action asserting a new continuation patent related to the patents from the prior cases. Adobe, however, had discontinued use of the accused technology long before the patent had issued. Adobe therefore moved for summary judgment of no remedies claiming Rosebud was not entitled to any pre-issuance damages under 35 U.S.C. § 154(d) because Adobe had no “actual notice” of the published application that led to the patent. Rosebud did not oppose the motion but instead argued that there were genuine issues of material fact as to whether Adobe’s outside counsel in the prior cases had searched for and found the related application which led to the continuation patent. The district court rejected Rosebud’s argument and granted Adobe’s motion for summary judgment.
On appeal, the Federal Circuit affirmed the district court’s decision, finding that Adobe’s knowledge of the parent applications was insufficient to establish actual notice under § 154(d). Specifically, the Court explained that although affirmative acts of notification are not required for “actual notice” under § 154(d), Rosebud’s circumstantial evidence was simply insufficient to raise a genuine issue of material fact with respect to Adobe’s knowledge of the continuation application.
Federal Circuit Upholds District Court Judgment of Inequitable Conduct and Award of Attorney’s Fees for a Walker Process Antitrust Violation
In Transweb, LLC v. 3M Innovative Properties Co., Appeal No. 2014-1646, the Federal Circuit affirmed the district court’s: (1) finding of inequitable conduct; (2) finding of a Walker Process antitrust violation; and (3) finding that trebled attorney’s fees was appropriate for the Walker Process violation.
3M sued TransWeb for infringement of two patents related to respirator filters. A jury found that TransWeb did not infringe the asserted claims, that the claims were invalid as obvious, and that 3M had committed a Walker Process antitrust violation by asserting fraudulently-obtained patents. The jury also provided an advisory verdict that the patents were unenforceable due to inequitable conduct, which the district court agreed with. 3M appealed.
The Federal Circuit affirmed the jury’s obviousness and inequitable conduct holdings. Regarding inequitable conduct, the Federal Circuit upheld the district court’s findings that 3M had withheld information about TransWeb’s public disclosure of samples rendering the claims obvious, and that 3M had intentionally done so by misrepresenting that such samples were obtained under the terms of a nondisclosure agreement.
Regarding the Walker Process violation, 3M did not contest that a finding of inequitable conduct satisfied the requirement that the patents be obtained via fraud. 3M only contested whether the district court properly defined the relevant market for determining whether there was a dangerous probability that 3M had market power and whether the award of attorney fees was appropriate. The Federal Circuit found that there was substantial evidence to support the jury’s finding that 3M had market power. The Federal Circuit also found that an award of attorney’s fees was proper because, in defending the infringement suit, TransWeb had been forced to incur attorney’s fees.
The Federal Circuit, En Banc, Finds That Foreign Sales Do Not Trigger Patent Exhaustion, Deviating From The Supreme Court’s Kirtsaeng Holding
In Lexmark Int’l, Inc. v. Impression Products, Inc., Appeal Nos. 2014-1617, -1619, the Federal Circuit held that (1) a patent holder may expressly restrict buyers from reselling and reusing a patented product so long as the restrictions do not violate some other area of law; and (2) foreign sales do not exhaust the patentee’s U.S. patent rights in the patent, even when no reservation of rights accompanies the sale.
Lexmark sells toner cartridges in two ways. Under the first way, the buyer pays full price and there are no terms restricting the resale or reuse. Under the second way, the buyer receives a discount and the cartridge is subject to single-use and no-resale restrictions. Impression is a cartridge remanufacturer that refills used Lexmark cartridges and sells them in the U.S., including cartridges that were originally sold with restrictions on reuse, and other cartridges that were originally sold outside the U.S.
Lexmark sued Impression for patent infringement, alleging that Impression sold and imported into the U.S. the patented cartridges. Impression argued that Lexmark’s initial sales exhausted its patent rights. The district court held (1) Lexmark’s patent rights were exhausted by its domestic sales because the Supreme Court’s holding in Quanta overruled Mallinckrodt’s “single-use” restriction exception to patent exhaustion; and (2) Lexmark’s patent rights were not exhausted by its foreign sales because the Supreme Court’s holding in Kirtsaeng did not overrule Jazz Photo regarding exhaustion of patent rights by a first sale abroad, due to the differences between copyright exhaustion and patent exhaustion.
The Federal Circuit held that Mallinckrodt remains good law, and that unless a sale restriction is improper under some other body of law, a patentee’s own sale of its patented article under a clearly communicated restriction does not exhaust the patentee’s reserved patent rights. The Court reasoned that Quanta did not involve a patentee’s sales and there were no restrictions on the sales made by the licensee in Quanta.
The Federal Circuit affirmed the district court’s decision that the sale of a U.S.-patented article abroad does not exhaust the patentee’s U.S. patent rights in the article. The Court refused to apply the doctrine of copyright exhaustion by a foreign sale in Kirtsaeng to patent law, reasoning that the holding in Kirtsaeng is copyright specific, especially in light of the “right of sale” guarantee under the copyright statute, 17 U.S.C. § 109(a).
The dissent concluded that Mallinckrodt’s “single-use” restriction exception is inconsistent with Quanta and that Jazz Photo’s patent exhaustion protection should only extend to cases where the patent holder has notified the buyer of its retention of U.S. patent rights.
Courts May Not Enhance Awards for Attorney’s Fees Under Octane Fitness as a Deterrent
In Lumen View Tech. LLC v. FindTheBest.com, Inc., Appeal Nos. 2015-1275, -1325, the Federal Circuit considered a district court’s award of attorney’s fees for an exceptional case under Octane Fitness and remanded for further consideration.
Lumen View sued FindTheBest.com for patent infringement. The district court found that, even under Lumen View’s proposed claim constructions, FindTheBest.com was not liable for infringement. The court further found that the non-infringement was so plain that “the most basic” pre-suit investigation would have avoided litigation. The district court determined that Lumen View’s litigation was part of a “predatory strategy” to extract money through a nuisance-value settlement. The district court also granted FindTheBest.com’s motion for judgment on the pleadings that the patent claims were invalid under § 101. The district court also found that FindTheBest.com was entitled to reasonable attorney’s fees under Octane Fitness and doubled the award to serve as a deterrent. Lumen View appealed.
The Federal Circuit upheld the determination that the case was exceptional. Regarding the quantity of fees awarded, the Federal Circuit analyzed the district court’s calculation under the “lodestar method,” which calculates a presumptively reasonable fee amount by multiplying a reasonable hourly rate by a reasonable number of hours required to litigate a comparable case. While the Federal Circuit noted that the “lodestar method” does allow for enhancement of attorney fees in “rare or exceptional” cases, deterrence is not an appropriate consideration for enhancing attorney fees. Accordingly, the Federal Circuit remanded the amount of attorney’s fees awarded for further consideration.
Federal Circuit Finding Reminds Patent Holders That They Select Representative Patents To Try Before A Jury At Their Own Peril
In Nuance Communications, Inc. v. Abbyy USA Software House, Inc., Appeal Nos. 2014-1629, -1630, the Federal Circuit affirmed the district court’s judgment of non-infringement of eight patents, even though only three patents had been tried to the jury.
Nuance sued Abbyy for infringing eight patents. Nuance opposed multiple trials. The district court adopted Nuance’s proposal to limit its case to four patents and fifteen claims. Before trial, Nuance further narrowed its case to three patents. The jury found non-infringement and the court entered final judgment.
Nuance argued that the district court violated its due process rights by entering final judgment on all eight asserted patents, including patents that had not been tried before the jury. The Federal Circuit recognized that it would have been preferable for the district court to explain the consequences of Nuances’s decision to narrow its case. Still, the Federal Circuit determined that Nuance had made a tactical litigation decision to narrow its case and had failed to protect its due process rights regarding the unselected patents.
Nuance also argued for a new trial because the district court had failed to resolve a claim construction dispute before trial. But the district court adopted Nuance’s proposed construction for a plain and ordinary meaning. When the parties disagreed as to the plain and ordinary meaning, the district court instructed the jury on the dictionary definition to explain the plain and ordinary meaning. The Federal Circuit held there was no O2 Micro violation where the district court adopted Nuance’s proposed construction, which Nuance itself later became dissatisfied with.
Federal Circuit Decides in Favor of Samsung in Long-Running Apple v. Samsung Dispute
In Apple Inc. v. Samsung Elecs. Co., Ltd., Appeal Nos. 2015-1171, -1194, -1195, the Federal Circuit overturned a district court’s judgment ordering Samsung to pay nearly $120 million to Apple.
Regarding the first Apple patent that Samsung was found to infringe, the Federal Circuit disagreed with the district court’s conclusion that there was evidence to show Samsung’s product practiced the “analyzer server” limitation of one infringed patent. The claim construction required that the “analyzer server” be “run separately from the program it serves.” The Federal Circuit found that Apple’s expert testimony actually supported Samsung’s non-infringement argument and that there was no evidence to support Apple’s infringement claims. Consequently, the court reversed the denial of Samsung’s motion for JMOL of non-infringement.
Regarding the other two patents Samsung had been found to infringe, the Federal Circuit disagreed that the claims were not obvious in light of the combination of prior art references. The Federal Circuit found a motivation to combine the references because “mere disclosure of more than one alternative” is not teaching away. Moreover, the Federal Circuit dismissed Apple’s secondary considerations of nonobviousness as “weak” in part because Apple’s surveys and studies could not tie the iPhone’s commercial success to the patented features.
The Federal Circuit also affirmed the infringement judgment for one of Samsung’s patents. The court reasoned that even though Apple’s chips may use separate components to perform the claim limitations, “a jury may still have reasonably concluded that the chip (not the individual components) performs [the] steps” and meets the claim limitations. The court further reasoned that in light of Samsung’s expert testimony, a jury could have reasonably concluded that Apple’s products practiced the remaining limitations of the claim.
Under O2 Micro, a District Court Must Provide a Claim Construction if the Parties Dispute the Meaning of a Claim Term
In Eon Corp. IP Holdings LLC v. Silver Springs Networks, Inc., Appeal No. 2015-1237, the Federal Circuit held that the district court had erred in failing to construe a claim term, violating the Federal Circuit’s precedent in O2 Micro that when there is a dispute, the court must provide a construction.
Eon sued Silver Spring for patent infringement relating to networks for two-way interactive communications between local subscribers and a base station, where the local subscriber’s “unit” is either “portable” or “mobile.” The accused units were utility meters attached to the exterior walls of buildings. The district court instructed the jury that the terms “portable” and “mobile” were to be given their plain and ordinary meaning. The Federal Circuit held that this instruction violated O2 Micro by improperly delegating a dispute about claim scope to the jury. Specifically, the plain-and-ordinary-meaning instruction did not resolve the parties’ dispute about whether the terms should be construed broadly enough to cover products that are only theoretically capable of being moved. The Federal Circuit also determined that no remand was necessary because no reasonable jury could find that the accused products (which were stationary) could infringe Eon’s patents. The patents’ specification described “portable” and “mobile” units that were easily transported between different locations and that are distinguished from fixed or stationary units. In this context, the accused meters do not infringe.
